Research Dept. News
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Monthly Report, num 348 - July-August 2011
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International review - Commodities
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Change in direction for oil prices
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Oil falls to 103 dollars per barrel thanks to the IEA releasing reserves.
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Between 20 May and 20 June, the price of crude rose by 2.7%, reaching 112.32 dollars per barrel (Brent quality, for one-month deliveries), a 21.3% rise since start of year. As this Report was going to press, the International Energy Agency (IEA) released 60 million barrels of strategic reserves to offset OPEC's lack of agreement to increase production, pushing the price down to 102.72 dollars per barrel, the lowest level since 11 February, at the start of the escalating Libyan crisis.
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The trend in commodities is downwards but rice and sugar rise, while gold remains high.
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This action, agreed by the United States, Japan, South Korea and Germany, was approved by Saudi Arabia, although we have yet to see how the OPEC will react. The IEA has been preparing this action for the last three months given the restrictions imposed by the Libyan crisis, rising world demand and the threat posed to world growth by oil prices higher than 100 dollars per barrel.
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The rest of the commodities saw moderate drops and The Economist index fell by 1.6% between 20 May and 20 June. Base metals saw widespread declines, especially nickel. In foods, although wheat and coffee were clearly on a downward path, rice and sugar bucked the trend with increases of 12.0% and 18.5%, respectively. For its part, gold continued to capitalize on the uncertainty in the global economy, remaining above 1,500 dollars per ounce and very close to its record high.
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